Friday, May 29, 2009

Oil hits a six month high

Oil prices today hit $66 a barrel. It is a fresh six-month high and it is the biggest monthly gain in more than 10 years.

The recent fall in UK inflation is due to two factors. The first was the temporary reduction in VAT rates. That comes to an end in December. The second was the fall in oil prices. That has come to an end this month.

To summarize; the UK central bank is printing cash, the fiscal deficit is heading for 12 percent of GDP, and the price of oil is rising rapidly. Put it together and what have you got?

It begins with I.


  1. Imbeciles in charge of economic policy!

  2. Hmmm....the global market price for oil is US$ denominated. The US$ has been sliding in value against a basket of currencies. The US$ price of oil increases. Are the 2 phenomana related? I think so. I suspect the sterling pricen of oil hasn' moved too much. C'mon Alice you are usually very diligent in your homework

  3. Hyperinflation

    I have noticed the price of petrol inexorably rising and thinking uh oh its time to flit

  4. Very good piece over at Zerohedge that discusses the return of speculation to the oil market.

    Apparently above ground storage is reaching new highs again. Price increase has nothing to do with real demand.

  5. I know! Let's print more money! Then we can buy all the oil we want!

  6. I wondered if you've seen any projections for the decline in North Sea oil. I believe it peaked in 1999. It would be interesting to see some guesstimates for the decline in revenue and the effect on the UK's budget.

  7. It begins with S, 'cos it would be stagflation.
    There isn't going to be a wage spiral with this much unemployment. The government cannot induce inflation, only stagflation. That aside, do you think it is getting easier to pay down debts, or harder? If its harder then deflation continues apace.